Gold futures rose Wednesday, with bulls attempting to stretch a winning streak for the precious metal to five sessions after data on U.S. wholesale prices revealed a bigger-than-expected rise in March.
“Traders know that inflation isn’t going to ease off from its current level overnight, even though we may have seen a peak inflation situation,” said Naeem Aslam, chief market analyst at AvaTrade, in a daily note.
On Wednesday, data showed that the cost of wholesale goods and services jumped 1.4% in March largely because of more expensive gas and food, signaling that U.S. inflation is likely to stay near a 40-year high through the spring. Economists polled by The Wall Street Journal had forecast a 1.1% gain.
“The other important point for gold traders is that if inflation has peaked, that means that the future trajectory of the [Federal Reserve’s] monetary policy isn’t going to be as hawkish as it currently is,” said Aslam. “This fact is also supporting the current gold price move.”
Gold for June delivery
was up $6.90, or 0.4%, to $1,983 an ounce on Comex. May silver
was up 22.5 cents, or 0.9%, at $25.96 an ounce. Gold rose 1.4% Tuesday for its fourth straight gain, logging its highest finish since March 11. May silver closed at its highest since March 24.
“As the war in Ukraine approaches a new stage, with a Russian offensive expected in the east, gold’s haven appeal could once again increase, creating scope for further gains,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
Russian President Vladimir Putin on Tuesday vowed that his country’s invasion of Ukraine would continue until its goals are met as he concentrates forces on the eastern Donbas region after a push toward the capital of Kyiv was thwarted.
Gains for gold on Wednesday came as U.S. Treasury yields eased, following the release of US inflation data, which despite reaching a fresh 40-year high, also gave signs that it may have peaked, Evangelista said.
“The markets have been pricing-in the Fed’s new hawkish stance and the prospect of inflation stabilization will reduce the scope for further dollar gains, a scenario that will be positive for gold due to the inverted correlation with the greenback,” he wrote.
Gold, however, has largely brushed off a recent rise in Treasury yields, with analysts tying underlying support to the metal’s roles as a haven and an inflation hedge. Higher Treasury yields raise the opportunity cost of holding nonyielding assets like gold.
In other metals trading, May copper
lost 0.5% to $4.688 a pound. July platinum
added 1.3% to $985.40 an ounce and June palladium
traded at $2,378 an ounce, up 1%.